Zambia’s Loss-Making Power Utility Seeks Steep Tariff Hikes

LUSAKA (Capital Markets in Africa) – Zambia’s state-owned electricity provider has applied to the energy regulator for tariff increases that will see some prices more than triple as it seeks to return to profit.

For commercial users, Zesco Ltd. has requested to raise charges to 1.85 kwacha per kilowatt-hour ($0.15) from 0.52 kwacha, it said in a statement on its website. For the biggest users, Zesco asked to increase tariffs to 0.36 kwacha per kilowatt-hour, from 0.21 kwacha, it said in the statement dated March 9.

The utility, which supplies almost all of Zambia’s power, reported an estimated 1.7 billion-kwacha loss in 2018, and the proposed increase will allow a 389 million kwacha profit this year, it said. Copper mines owned by companies including Glencore Plc, First Quantum Minerals Ltd. and Vedanta Ltd. account for more than half of Zambia’s electricity consumption.

The southern African nation’s energy regulator, which decides on electricity prices, didn’t immediately respond to a request for comment. Zesco last raised prices in 2017 when it increased tariffs by 75 percent in two stages.

The company is seeking to increase tariffs again, due to higher lending rates, a weaker currency, and higher power generation costs from new projects that have started producing, it said.

Source: Bloomberg Business News